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In brief

The Competition and Consumer Commission of Singapore (CCCS) commenced public consultation on its proposed amendments to the Guidelines on the Appropriate Amount of Penalty in Competition Cases (“Penalty Guidelines“) on 16 July 2021. The proposed amendments clarify the CCCS’s policy position on the treatment of undertakings that did not play a leader, instigator or proactive participant role in an infringement; and illustrate when “substantially limited involvement” by an undertaking in an infringement of the section 34 prohibition under the Competition Act (Cap 50b) (“Act“) would amount to a mitigating factor. The closing date for public consultation submissions is 5 August 2021.


Comments

The Penalty Guidelines provide general guidance and information about the basis on which the CCCS will calculate financial penalties for infringements of the Act’s prohibitions. The CCCS received representations in past cases on the mitigating weight to be attached to an undertaking’s role in relation to an infringement of section 34 of the Act (“Section 34 Prohibition“). The CCCS notes that there are “certain situations” where an undertaking found liable for infringing the Section 34 Prohibition may be less culpable and qualify for a mitigating discount.

The proposed amendments clarify that an undertaking needs to show that:

  1. its involvement in the infringement was substantially limited; and
  2. it avoided applying the anti-competitive agreement by adopting competitive conduct on the market.

For further information, and to discuss what this development might mean for you, please get in touch with your usual Baker McKenzie contact.

In more detail

The Act provides that the CCCS may impose a financial penalty if it is satisfied that an undertaking which has committed an infringement of the Act’s prohibitions intentionally or negligently. The CCCS utilises six steps when calculating financial penalties:

Step 1: Calculation of the base penalty having regard to the seriousness of the infringement (expressed as a percentage rate) and the turnover of the business of the undertaking in Singapore for the relevant products and relevant geographic markets affected by the infringement in the undertaking’s last business year

Step 2: Adjustment for the duration of the infringement

Step 3: Adjustment for aggravating or mitigating factors

Step 4: Adjusment for other relevant factors, e.g., deterrent value

Step 5: Adjusment if the statutory maximum penalty under section 69(4) of the Act is exceeded

Step 6: Adjustment for immunity, leniency reductions and/or fast-track procedure discounts

The proposed amendments to the Penalty Guidelines centre around Step 3 of the CCCS’s financial penalty calculation process: “Adjustment for aggravating or mitigating factors”.

As a starting point, the CCCS takes the position that an undertaking’s mere presence at a meeting where anti-competitive discussions are carried out amounts to behaviour that infringes the Section 34 Prohibition. The CCCS considers this is so even if an undertaking does not participate or contribute in any way to the anti-competitive discussions, and does not act on any information shared during the meeting or anti-competitive strategy agreed upon during the meeting. Instead, undertakings should publicly distance themselves and bring the anti-competitive agreements to the CCCS’s attention by lodging a complaint, or if they are involved, consider applying for lenient treatment.

That said, the CCCS notes in its public consultation document on the Penalty Guidelines that it “accepts there exist certain situations where an undertaking found liable for infringing section 34 of the Act may be less culpable and therefore qualify for a mitigating discount”. However, such situations should be “narrowly circumscribed”. In order to qualify for a mitigating discount, the CCCS takes that view that an undertaking has to demonstrate that its conduct had clearly and substantially departed from the understanding or consensus relating to the implementation of the cartel or anticompetitive agreement/arrangement to the point of disrupting the cartel’s operations. The undertaking cannot rely on the fact that it had “merely gone along with the rest of the cartel” to implement the anti-competitive agreement as grounds for a mitigating discount. This is because the undertaking’s mere participation adds to the cartel’s strength.

The proposed amendments clarify that an undertaking needs to show that:

  1. its involvement in the infringement was substantially limited; and
  2. it avoided applying the anti-competitive agreement by adopting competitive conduct on the market.

Lastly, the mere fact that an undertaking did not play a leader or instigator role or participate in the cartel in a pro-active way will not, without more facts to evidence substantially limited involvement, qualify for a mitigating discount.

The CCCS clarifies that it draws reference to the European Commission’s 2006 Guidelines on the method of setting fines as well as the European Commission’s decisions and the European courts in defining “substantially limited involvement”.

The closing date for public consultation submissions is 5 August 2021.

Author

Hari is a principal in the Competition & Antitrust Practice Group at Baker McKenzie Wong & Leow. His practice covers competition law and regulation-related advisory work in Singapore and the Southeast Asia region. Hari was the Director of the Enforcement Division at the Competition and Consumer Commission of Singapore ("CCCS"), where he supervised the CCCS’s Intelligence Unit and IT Forensics Taskforce, in addition to the supervision of case teams on various investigations, mergers and notifications. He was also responsible for managing leniency applications made to the CCCS, overseeing the secret complainant and reward schemes, planning and executing dawn raids, and recording investigative statements of persons under investigations. Hari led teams involved in defending appeals brought against the CCCS’s decisions before the Competition Appeals Board. Prior to joining the Baker McKenzie Wong & Leow, Hari completed stints in private practice and as a Justices' Law Clerk with the Singapore Legal Service.

Author

Lip Hang Poh is a Competition Economist in Baker McKenzie's Singapore office.

Author

Jordan Tong is an associate in Baker & McKenzie.Wong & Leow Singapore office.

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